How the Internet of Things Is Changing Ecommerce

Friday 10 November 2017 | 10:36 AM
CET

Markus Bergthaler, Merchant Risk Council:Like nearly every other industry, the ecommerce segment has also been disrupted by the Internet of Things

Shopping and purchasing are now easier than ever, but businesses need to be incredibly savvy about their marketing and their business processes if they are to remain competitive. Internet of Things adoption (especially smart homes and smart features) is proliferating rapidly and shows no sign of slowing down. Businesses need to adapt quickly and find innovative ways to leverage this technology.

Purchasing on the Internet of Things

An Internet-of-Things device is most often associated with smart devices, such as refrigerators that can order groceries or personal assistant devices that can automatically order products online. Many of the personal assistant devices are specifically connected to venues such as Google Express or Amazon Marketplace, whereas a smart home device may be connected to a local vendor or other store. Internet-of-Things devices can also be very simple; Amazon's wireless Dash buttons can easily reorder products. Internet of Things devices are typically seen in smart home networks, smart assistants and on mobile phones.

The Internet of Things has streamlined purchasing so that customers can immediately buy items they need. This type of on-the-fly ordering means that customers are far more likely to engage and commit to a sale, but it also means that they are operating in specific ecommerce channels. They are not as likely to compare prices or look for deals, which can be a benefit to established businesses – but likewise to the detriment of businesses trying to grow and to expand.

Internet-of-Things devices may also have the capabilities to refill themselves, such as printers and copiers that are able to order their supplies on demand. Essentially, anything that is designed to replenish itself through its own Internet access is considered an Internet device. Most notable, however, is that the Internet device must already be attached to an ecommerce storefront in order to have access to the items that they want to purchase.

In the past, many of the concerns regarding Internet of Things purchasing were directly related to security. Strides in cloud-based technology, encryption and other similar security standards have now made Internet of Things ecommerce purchasing just as secure as many other types of purchasing. The principle concerns are instead related to customer acquisition and customer retention.

Challenges facing marketers on the Internet of Things

1. Customer acquisition
Internet of Things systems are often designed to facilitate sales for a specific product, service or brand. Because of this, it can be difficult to bring in a customer who is already with another company. An excellent example of this is smart home refrigerator ordering. A refrigerator is going to have specific contracts with vendors and negotiating these contracts will be critical for consumer access.

2. Sales processes
Fulfilling Internet of Things orders requires different types of sales processes, specifically designed to streamline the purchase from these new and previously non-standard devices. Companies must be innovative when developing and optimising the processes to deal with these types of purchases.

3. Upselling and modification
The Internet of Things makes it easier for customers to order exactly what they need when they need it, but this can also substantially reduce the amount of potential upselling a business can do. Keeping customers engaged will require more creativity and different marketing tactics.

As the Internet of Things continues to grow and evolve, it becomes easier to retain customers once they are brought into a merchant’s Eco-system. However, because of the ease of Internet purchasing and the general thrust of the Internet of Things, it will become more difficult for businesses to bring in customers from their competitors. It is vitally important that companies develop and execute their own Internet-of-Things strategy as soon as possible. Whether it comes to developing new “smart” products, which can range from light bulbs to fitness equipment and anything in between, it is crucial for companies to think about new ways consumers might use a product and engage with it. Whether it is from the grocery store to look inside their refrigerator via their smartphone or by pressing a button in the bathroom to order more shampoo, consumers will adapt to whatever is most convenient and will shop with companies that provide the least customer friction.

About Markus Bergthaler

Markus oversees the development of all Association programme content, conference education, committee and community subject matter, website content, benchmarking and online forum topics. Markus joined the Merchant Risk Council from Wizards of the Coast where he lead the company's fraud department.

About the Merchant Risk Council

The Merchant Risk Council is the leading global trade association for fraud and payments professionals. The Merchant Risk Council provides support and education to members with proprietary benchmarking reports, whitepapers, presentations and webinars. The Merchant Risk Council hosts four annual conferences in the US and Europe, as well as regional networking meetings for professionals to connect, exchange best practices and share emerging trends.

This article is part of the exclusive Online Payments and Ecommerce Market Guide 2017, a must-read for anyone trying to understand how the ecommerce and payments market is developing. Download your free copy of the guide and discover more insights addressing the most recent and discussed trends in the global ecommerce industry.